Eric Frieman’s brother is an Army infantry officer deployed twice into combat zones, who lost more of his soldiers to suicide and behavioral health-related challenges than combat. Frieman’s own best friend died from a drug overdose.
In these instances, Frieman told Addiction Treatment Business that he saw people “not able to get the help that they needed because it was too expensive, or they had a mental health issue and a substance use issue and their providers could only treat one or another.”
Frieman vowed to do something about this.
Following a career as an investment banker who advised on health care deals, Frieman founded outpatient behavioral health care provider Forge Health in 2016, thanks in part to seed money from Montage Ventures, a San Francisco-based Venture Capital firm. Last year, Forge Health announced that it raised $21.5 million in two rounds of venture capital funding, each led by New York-based HC9 Ventures.
White Plains, New York-based Forge Health’s money-making model is, like many providers, to get reimbursed through commercial health care insurance. Over 85% of Forge’s clients are covered under private health plans, Frieman recently told ATB, with some of the remaining patients getting coverage through Medicare and Medicaid.
Focused on the Northeast region, Forge Health operates in Massachusetts, New Hampshire, New Jersey, New York. and Pennsylvania. It has 19 physical clinics, providing a hybrid of in-person and virtual care. Frieman said that Forge Health’s “core business” is profitable right now, but that the company’s present focus is on growth and how to sustainably scale.
Forge Health perhaps stands out in two ways.
One is the company’s focus on treating comorbidities, especially a combination of substance use disorder (SUD) and mental health issues. The bifurcation of substance use disorders and mental health conditions is “something that started decades ago” and persists to this day despite an “increasing overlap in co-occurring conditions,” Frieman said. The founder and CEO described Forge Health’s top priority as hiring clinicians trained in both SUD and mental health treatment.
The other distinction is Forge Health pairing the patient with not just a clinician but also a designated nurse practitioner and administrative care coordinator. Forge Health offers a “multi-disciplinary, multi-person care team,” Frieman said, while competitors may provide patients a one-off therapist, then later assign them a medication provider.
Forge Health has about 250 employees, Frieman said, and payroll is by far the company’s biggest expense.
According to Frieman, the comorbidity, multidisciplinary approach earned the respect of primary care physicians and, in turn, insurers and hospitals who work with those physicians. Frieman cited Carelon Behavioral Health in New York and Independence Blue Cross Blue Shield in southeastern Pennsylvania as some organizations that consistently refer clients to Forge Health.
The behavioral health industry itself has grown during Forge Health’s seven years as a company, largely due to the escalating opioid crisis and public attention to mental health, particularly during the COVID-19 pandemic.
As the world around it has changed, Frieman cites one way Forge Health has followed, which is virtual care. After starting with just in-person care, approximately 60% of Forge Health’s patients today avail themselves of remote meetings with their clinician.
A national focus on mental health also opened the floodgates for investor money, with Wall Street and Silicon Valley making bets on everything from psychiatric care providers to apps that help people meditate. Venture capital money poured into behavioral health companies increased nearly fivefold from 2019 to 2021, according to a report from Rock Health, a venture capital investor.
That funding wave has lessened somewhat in 2022 and 2023, but investor interest remains.
Forge Health was, and is, part of this trend, as evidenced by last year’s two fundraising rounds. But Frieman drew a contrast between Forge Health and other behavioral health companies who have rapidly scaled, stating his business is focused on the details of making sure it has excellent multidisciplinary teams.
The CEO echoed how there is a current lull in venture capital investment for behavioral health companies, and that Forge Health should position itself for the next wave.
“A lot of venture capital firms have already made their investment in behavioral health, so their profile may already be at capacity,” Frieman said.
Still, the CEO acknowledged he has an eye on subsequent fundraising rounds. If Forge Health can show its operating model has clinical efficiency and a path to profitability, Frieman said, “investment money will flow from there.”
